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Alcohol tax will no longer aid scholarships next year

A state alcohol tax that’s helped thousands of New Mexico high school graduates cover college costs through the lottery scholarship is set to dry up at the end of next year, which could force students to find other means, be it other scholarships or loans, to make up the difference.

Legislators voted to shore up the scholarship fund in 2014 with about $19 million from the alcohol excise tax through mid-2018.

State Rep. Jason Harper, R-Rio Rancho, was the one who called for that time limit in funding. He said he will vote against using the tax for further support.

“I know it’s not popular,” Harper said. “That money needs to go to DWI prevention programs, not paying for kids’ college.”

But University of New Mexico officials, students and some legislators disagree.

Jenna Hagengruber, the head of UNM’s student government, said UNM and New Mexico State University students will lobby to continue drawing from the alcohol excise tax fund for four more years. And UNM President Robert Frank said that method is as good as any other suggested so far.

“Students count on it,” Frank said. “It’s an important thing to stabilize.”

Frank said the university will support the student push to buoy the lottery scholarship with the tax.

Senate Majority Leader Michael Sanchez, D-Belen, designed most of the 2014 bill to use the tax to aid the lottery scholarship program. He said he is looking at renewing the draw from the alcohol excise tax and other measures for the program, although he wasn’t ready to share specifics Friday afternoon.

“Is there an urgency? Yes,” said Sanchez, who sponsored the legislation creating the lottery scholarship in 1996.

The lottery scholarship’s ability to cover costs will shrink dramatically if money from the alcohol excise tax is removed, said Joseph Cueto, a spokesman for the state Higher Education Department.

The scholarship used to cover 100 percent of tuition and fees for New Mexico high school graduates, but that rate has eroded in recent years. The lottery currently covers about 90 percent of tuition and fees. That’s down from 95 percent in the 2014-15 academic year. Loss of the excise tax would mean reducing the amount of tuition and fees covered per student to about 60 percent, according to the Higher Education Department.

Since the program started, lawmakers have changed the eligibility rules, such as requiring students to take 15 credit hours instead of 12 and trimming the scholarship from eight to seven semesters in an attempt to slow the drain on the fund. Students are also required to maintain a grade-point average of at least 2.5.

New Mexicans managed to dump $19.6 million into the fund in recent weeks in attempts to win a $1.5 billion Powerball jackpot. But state lottery officials said future sales remain unclear.

Cueto said the state’s Higher Education Department officials estimated a $64 million need for the scholarship program for the 2016 fiscal year.

UNM also will be seeking $30 million in general obligation funds to start construction for a new physics and astronomy building. They will seek another $10 million in bonds for a new health education building on the West Side campus.

Other initiatives include refunding a program that places doctors in rural New Mexico towns or funding the Office of the Medical Investigator at the University Hospital. The university will also seek money to give raises to faculty and staff.